October 29, 2019 / 9:11 AM / 21 days ago

Australia's Macquarie to scale back U.S., European equities businesses

LONDON (Reuters) - Australian investment bank Macquarie Group (MQG.AX) said on Tuesday that it will scale back its cash equities businesses in most areas outside the Asia Pacific region as tougher regulations bite.

FILE PHOTO: A pedestrian walks past the logo of Australia's investment bank Macquarie Group Ltd which adorns a wall on the outside of their Sydney office headquarters in central Sydney, Australia, July 18, 2017. REUTERS/David Gray

The bank, which employs about 700 people in cash equities, is expected to cut 100 jobs in London and New York, a source with direct knowledge of the matter told Reuters, adding that it will have “smaller teams” in those locations to support its core Asia Pacific businesses.

Macquarie is the latest global investment bank to trim its equity operations - including trading, sales and research - in Europe over the past year as difficult market conditions and the impact of tougher regulations hit returns.

As a part of the restructuring, the bank said it entered a preliminary “cooperation” deal with French broker Kepler Cheuvreux to support existing European clients in equity trading and research, while Kepler’s Asian clients will in return get support from Macquarie.

Macquarie is also seeking strategic partners in the Americas to boost what it offers to clients, the bank said in a statement.

“It has been very challenging for Japanese, Canadian, Australian banks etc. in European cash equities, even top 12 banks have struggled,” said Amrit Shahani, research director at industry consultant Coalition.

In April, Japan’s Nomura Holdings (8604.T) cut some jobs in its European trading business.

Revenue from Macquarie’s equities trading in the latest financial year shrunk by a third to A$242 million ($166 million). The company does not provide figures by region for its equities business.

Macquarie plans to focus on its Asia Pacific equities trading business, the sources said, which will likely be its only major equities operation remaining after it scaled back from the Middle East in May.

A broader slowdown in equities trading has prompted banks to cut costs. In July, Deutsche Bank’s (DBKGn.DE) massive cull of 18,000 jobs in a 7.4 billion euro ($8.3 billion) shake-up included staff reductions from Sydney to New York.

At least four trading sources at other brokerages said their contacts at Macquarie’s equities research and trading businesses could not be reached on their usual messaging systems on Tuesday morning.

“Lots of staff are milling around the local coffee shops ... opposite their building (in the City of London) waiting to be allowed in,” one of the sources said.

Bloomberg was first to report the Macquarie job cuts on Tuesday.

The bank, which is due to report its half-year earnings on Friday, had said in March that it faced “challenging market conditions and reduced opportunities” in its cash equities and equity derivatives trading business.

Another source at a hiring firm noted the latest move was a U-turn for Macquarie, saying it was hiring as little as a few months back.

Reporting by Thyagaraju Adinarayan, Simon Jessop and Saikat Chatterjee; editing by Simon Jessop, Susan Fenton and Deepa Babington

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